Intrinsic value of Starbucks - SBUX

Previous Close

$56.14

  Intrinsic Value

$41.28

stock screener

  Rating & Target

sell

-26%

Previous close

$56.14

 
Intrinsic value

$41.28

 
Up/down potential

-26%

 
Rating

sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of SBUX stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of Starbucks (SBUX) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  5.02
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
Revenue, $m
  22,387
  23,506
  24,682
  25,916
  27,212
  28,572
  30,001
  31,501
  33,076
  34,730
  36,466
  38,289
  40,204
  42,214
  44,325
  46,541
  48,868
  51,311
  53,877
  56,571
  59,399
  62,369
  65,488
  68,762
  72,200
  75,810
  79,601
  83,581
  87,760
  92,148
  96,755
Variable operating expenses, $m
 
  18,891
  19,828
  20,812
  21,845
  22,929
  24,068
  25,264
  26,519
  27,838
  29,222
  30,521
  32,048
  33,650
  35,332
  37,099
  38,954
  40,902
  42,947
  45,094
  47,349
  49,716
  52,202
  54,812
  57,553
  60,430
  63,452
  66,624
  69,956
  73,453
  77,126
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  18,252
  18,891
  19,828
  20,812
  21,845
  22,929
  24,068
  25,264
  26,519
  27,838
  29,222
  30,521
  32,048
  33,650
  35,332
  37,099
  38,954
  40,902
  42,947
  45,094
  47,349
  49,716
  52,202
  54,812
  57,553
  60,430
  63,452
  66,624
  69,956
  73,453
  77,126
Operating income, $m
  4,135
  4,615
  4,853
  5,104
  5,367
  5,643
  5,932
  6,237
  6,556
  6,892
  7,244
  7,768
  8,156
  8,564
  8,992
  9,442
  9,914
  10,410
  10,930
  11,477
  12,051
  12,653
  13,286
  13,950
  14,648
  15,380
  16,149
  16,956
  17,804
  18,694
  19,629
EBITDA, $m
  5,202
  5,621
  5,902
  6,197
  6,507
  6,832
  7,174
  7,533
  7,909
  8,305
  8,720
  9,156
  9,614
  10,094
  10,599
  11,129
  11,686
  12,270
  12,883
  13,527
  14,204
  14,914
  15,660
  16,443
  17,265
  18,128
  19,035
  19,986
  20,986
  22,035
  23,137
Interest expense (income), $m
  97
  138
  153
  170
  187
  205
  224
  244
  265
  287
  310
  334
  359
  386
  414
  444
  474
  507
  541
  577
  614
  654
  695
  739
  784
  832
  883
  935
  991
  1,049
  1,110
Earnings before tax, $m
  4,318
  4,477
  4,700
  4,934
  5,180
  5,438
  5,709
  5,993
  6,292
  6,605
  6,934
  7,434
  7,797
  8,178
  8,578
  8,998
  9,440
  9,903
  10,389
  10,900
  11,436
  11,999
  12,591
  13,211
  13,863
  14,548
  15,266
  16,021
  16,813
  17,645
  18,519
Tax expense, $m
  1,433
  1,209
  1,269
  1,332
  1,399
  1,468
  1,541
  1,618
  1,699
  1,783
  1,872
  2,007
  2,105
  2,208
  2,316
  2,430
  2,549
  2,674
  2,805
  2,943
  3,088
  3,240
  3,399
  3,567
  3,743
  3,928
  4,122
  4,326
  4,540
  4,764
  5,000
Net income, $m
  2,885
  3,268
  3,431
  3,602
  3,781
  3,970
  4,167
  4,375
  4,593
  4,822
  5,062
  5,427
  5,692
  5,970
  6,262
  6,569
  6,891
  7,229
  7,584
  7,957
  8,349
  8,760
  9,191
  9,644
  10,120
  10,620
  11,145
  11,695
  12,274
  12,881
  13,519

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2,691
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  14,366
  12,256
  12,868
  13,512
  14,187
  14,897
  15,642
  16,424
  17,245
  18,107
  19,013
  19,963
  20,961
  22,009
  23,110
  24,265
  25,479
  26,753
  28,090
  29,495
  30,969
  32,518
  34,144
  35,851
  37,644
  39,526
  41,502
  43,577
  45,756
  48,044
  50,446
Adjusted assets (=assets-cash), $m
  11,675
  12,256
  12,868
  13,512
  14,187
  14,897
  15,642
  16,424
  17,245
  18,107
  19,013
  19,963
  20,961
  22,009
  23,110
  24,265
  25,479
  26,753
  28,090
  29,495
  30,969
  32,518
  34,144
  35,851
  37,644
  39,526
  41,502
  43,577
  45,756
  48,044
  50,446
Revenue / Adjusted assets
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
  1.918
Average production assets, $m
  5,205
  5,453
  5,726
  6,012
  6,313
  6,629
  6,960
  7,308
  7,674
  8,057
  8,460
  8,883
  9,327
  9,794
  10,283
  10,798
  11,337
  11,904
  12,499
  13,124
  13,781
  14,470
  15,193
  15,953
  16,750
  17,588
  18,467
  19,391
  20,360
  21,378
  22,447
Working capital, $m
  1,062
  -1,716
  -1,802
  -1,892
  -1,986
  -2,086
  -2,190
  -2,300
  -2,415
  -2,535
  -2,662
  -2,795
  -2,935
  -3,082
  -3,236
  -3,397
  -3,567
  -3,746
  -3,933
  -4,130
  -4,336
  -4,553
  -4,781
  -5,020
  -5,271
  -5,534
  -5,811
  -6,101
  -6,406
  -6,727
  -7,063
Total debt, $m
  3,933
  4,380
  4,848
  5,340
  5,856
  6,398
  6,967
  7,565
  8,192
  8,851
  9,543
  10,269
  11,031
  11,832
  12,673
  13,556
  14,483
  15,456
  16,478
  17,551
  18,678
  19,861
  21,103
  22,407
  23,777
  25,215
  26,725
  28,310
  29,975
  31,722
  33,558
Total liabilities, $m
  8,916
  9,363
  9,831
  10,323
  10,839
  11,381
  11,950
  12,548
  13,175
  13,834
  14,526
  15,252
  16,014
  16,815
  17,656
  18,539
  19,466
  20,439
  21,461
  22,534
  23,661
  24,844
  26,086
  27,390
  28,760
  30,198
  31,708
  33,293
  34,958
  36,705
  38,541
Total equity, $m
  5,450
  2,892
  3,037
  3,189
  3,348
  3,516
  3,691
  3,876
  4,070
  4,273
  4,487
  4,711
  4,947
  5,194
  5,454
  5,727
  6,013
  6,314
  6,629
  6,961
  7,309
  7,674
  8,058
  8,461
  8,884
  9,328
  9,794
  10,284
  10,798
  11,338
  11,905
Total liabilities and equity, $m
  14,366
  12,255
  12,868
  13,512
  14,187
  14,897
  15,641
  16,424
  17,245
  18,107
  19,013
  19,963
  20,961
  22,009
  23,110
  24,266
  25,479
  26,753
  28,090
  29,495
  30,970
  32,518
  34,144
  35,851
  37,644
  39,526
  41,502
  43,577
  45,756
  48,043
  50,446
Debt-to-equity ratio
  0.722
  1.510
  1.600
  1.670
  1.750
  1.820
  1.890
  1.950
  2.010
  2.070
  2.130
  2.180
  2.230
  2.280
  2.320
  2.370
  2.410
  2.450
  2.490
  2.520
  2.560
  2.590
  2.620
  2.650
  2.680
  2.700
  2.730
  2.750
  2.780
  2.800
  2.820
Adjusted equity ratio
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236
  0.236

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,885
  3,268
  3,431
  3,602
  3,781
  3,970
  4,167
  4,375
  4,593
  4,822
  5,062
  5,427
  5,692
  5,970
  6,262
  6,569
  6,891
  7,229
  7,584
  7,957
  8,349
  8,760
  9,191
  9,644
  10,120
  10,620
  11,145
  11,695
  12,274
  12,881
  13,519
Depreciation, amort., depletion, $m
  1,067
  1,006
  1,049
  1,093
  1,140
  1,190
  1,241
  1,296
  1,353
  1,413
  1,476
  1,388
  1,457
  1,530
  1,607
  1,687
  1,771
  1,860
  1,953
  2,051
  2,153
  2,261
  2,374
  2,493
  2,617
  2,748
  2,886
  3,030
  3,181
  3,340
  3,507
Funds from operations, $m
  4,264
  4,274
  4,480
  4,695
  4,922
  5,159
  5,409
  5,671
  5,946
  6,235
  6,538
  6,815
  7,149
  7,500
  7,869
  8,256
  8,662
  9,089
  9,537
  10,008
  10,502
  11,020
  11,565
  12,137
  12,738
  13,368
  14,030
  14,725
  15,455
  16,221
  17,026
Change in working capital, $m
  90
  -82
  -86
  -90
  -95
  -99
  -104
  -110
  -115
  -121
  -127
  -133
  -140
  -147
  -154
  -162
  -170
  -178
  -187
  -197
  -206
  -217
  -228
  -239
  -251
  -264
  -277
  -291
  -305
  -320
  -336
Cash from operations, $m
  4,174
  4,356
  4,565
  4,785
  5,016
  5,258
  5,513
  5,780
  6,061
  6,355
  6,665
  6,948
  7,289
  7,647
  8,023
  8,418
  8,832
  9,268
  9,725
  10,204
  10,708
  11,237
  11,793
  12,376
  12,988
  13,632
  14,307
  15,016
  15,760
  16,542
  17,363
Maintenance CAPEX, $m
  0
  -813
  -852
  -895
  -939
  -986
  -1,036
  -1,088
  -1,142
  -1,199
  -1,259
  -1,322
  -1,388
  -1,457
  -1,530
  -1,607
  -1,687
  -1,771
  -1,860
  -1,953
  -2,051
  -2,153
  -2,261
  -2,374
  -2,493
  -2,617
  -2,748
  -2,886
  -3,030
  -3,181
  -3,340
New CAPEX, $m
  -1,519
  -249
  -273
  -286
  -301
  -316
  -331
  -348
  -365
  -384
  -403
  -423
  -444
  -466
  -490
  -514
  -540
  -567
  -595
  -625
  -656
  -689
  -723
  -760
  -798
  -838
  -879
  -923
  -970
  -1,018
  -1,069
Cash from investing activities, $m
  -850
  -1,062
  -1,125
  -1,181
  -1,240
  -1,302
  -1,367
  -1,436
  -1,507
  -1,583
  -1,662
  -1,745
  -1,832
  -1,923
  -2,020
  -2,121
  -2,227
  -2,338
  -2,455
  -2,578
  -2,707
  -2,842
  -2,984
  -3,134
  -3,291
  -3,455
  -3,627
  -3,809
  -4,000
  -4,199
  -4,409
Free cash flow, $m
  3,324
  3,294
  3,441
  3,604
  3,776
  3,956
  4,146
  4,345
  4,553
  4,773
  5,003
  5,203
  5,457
  5,723
  6,003
  6,297
  6,605
  6,929
  7,269
  7,626
  8,001
  8,395
  8,808
  9,242
  9,698
  10,177
  10,679
  11,207
  11,761
  12,342
  12,953
Issuance/(repayment) of debt, $m
  350
  447
  468
  492
  516
  542
  569
  598
  627
  659
  692
  726
  763
  801
  841
  883
  927
  973
  1,022
  1,073
  1,127
  1,183
  1,242
  1,304
  1,370
  1,438
  1,510
  1,585
  1,665
  1,748
  1,835
Issuance/(repurchase) of shares, $m
  -1,892
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -1,552
  447
  468
  492
  516
  542
  569
  598
  627
  659
  692
  726
  763
  801
  841
  883
  927
  973
  1,022
  1,073
  1,127
  1,183
  1,242
  1,304
  1,370
  1,438
  1,510
  1,585
  1,665
  1,748
  1,835
Total cash flow (excl. dividends), $m
  1,784
  3,741
  3,909
  4,096
  4,292
  4,498
  4,715
  4,942
  5,181
  5,431
  5,695
  5,929
  6,219
  6,524
  6,844
  7,180
  7,532
  7,902
  8,291
  8,699
  9,128
  9,578
  10,051
  10,547
  11,068
  11,615
  12,189
  12,792
  13,425
  14,090
  14,789
Retained Cash Flow (-), $m
  434
  -133
  -145
  -152
  -159
  -167
  -176
  -185
  -194
  -203
  -214
  -224
  -236
  -247
  -260
  -273
  -286
  -301
  -316
  -331
  -348
  -365
  -384
  -403
  -423
  -444
  -466
  -490
  -514
  -540
  -567
Prev. year cash balance distribution, $m
 
  2,691
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  6,299
  3,764
  3,944
  4,133
  4,331
  4,539
  4,758
  4,987
  5,228
  5,481
  5,705
  5,984
  6,277
  6,584
  6,907
  7,246
  7,602
  7,976
  8,368
  8,780
  9,213
  9,667
  10,144
  10,645
  11,171
  11,723
  12,302
  12,911
  13,550
  14,222
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  6,039
  3,446
  3,432
  3,403
  3,357
  3,294
  3,214
  3,117
  3,003
  2,873
  2,709
  2,553
  2,386
  2,210
  2,028
  1,841
  1,654
  1,469
  1,288
  1,116
  953
  802
  665
  542
  435
  342
  264
  200
  148
  107
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Starbucks Corporation (Starbucks) is a roaster, marketer and retailer of coffee. As of October 2, 2016, the Company operated in 75 countries. The Company operates through four segments: Americas, which is inclusive of the United States, Canada, and Latin America; China/Asia Pacific (CAP); Europe, Middle East, and Africa (EMEA), and Channel Development. The Company's Americas, CAP, and EMEA segments include both company-operated and licensed stores. Its Channel Development segment includes roasted whole bean and ground coffees, Tazo teas, Starbucks- and Tazo-branded single-serve products, a range of ready-to-drink beverages, such as Frappuccino, Starbucks Doubleshot and Starbucks Refreshers beverages and other branded products sold across the world through channels, such as grocery stores, warehouse clubs, specialty retailers, convenience stores and the United States foodservice accounts.

FINANCIAL RATIOS  of  Starbucks (SBUX)

Valuation Ratios
P/E Ratio 27.9
Price to Sales 3.6
Price to Book 14.7
Price to Tangible Book
Price to Cash Flow 19.3
Price to Free Cash Flow 30.3
Growth Rates
Sales Growth Rate 5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 5.5%
Cap. Spend. - 3 Yr. Gr. Rate 5.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 72.2%
Total Debt to Equity 72.2%
Interest Coverage 46
Management Effectiveness
Return On Assets 20.6%
Ret/ On Assets - 3 Yr. Avg. 22.1%
Return On Total Capital 30.6%
Ret/ On T. Cap. - 3 Yr. Avg. 32.7%
Return On Equity 50.9%
Return On Equity - 3 Yr. Avg. 49.6%
Asset Turnover 1.6
Profitability Ratios
Gross Margin 59.6%
Gross Margin - 3 Yr. Avg. 59.7%
EBITDA Margin 24.5%
EBITDA Margin - 3 Yr. Avg. 25%
Operating Margin 18.5%
Oper. Margin - 3 Yr. Avg. 19.5%
Pre-Tax Margin 19.3%
Pre-Tax Margin - 3 Yr. Avg. 19.8%
Net Profit Margin 12.9%
Net Profit Margin - 3 Yr. Avg. 13.5%
Effective Tax Rate 33.2%
Eff/ Tax Rate - 3 Yr. Avg. 31.8%
Payout Ratio 50.3%

SBUX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SBUX stock intrinsic value calculation we used $22387 million for the last fiscal year's total revenue generated by Starbucks. The default revenue input number comes from 2017 income statement of Starbucks. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our SBUX stock valuation model: a) initial revenue growth rate of 5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for SBUX is calculated based on our internal credit rating of Starbucks, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Starbucks.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of SBUX stock the variable cost ratio is equal to 80.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for SBUX stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Starbucks.

Corporate tax rate of 27% is the nominal tax rate for Starbucks. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the SBUX stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for SBUX are equal to 23.2%.

Life of production assets of 6.4 years is the average useful life of capital assets used in Starbucks operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for SBUX is equal to -7.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $5450 million for Starbucks - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1432.18 million for Starbucks is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Starbucks at the current share price and the inputted number of shares is $80.4 billion.

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Financial statements of SBUX
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